“Trying to catch me riding dirty,” has been an anthem that Detroiters have lived by when it comes to being properly insured, simply because Detroit’s car insurance is so expensive but today, we see a change. Michigan is witnessing a transformative change in its auto insurance landscape, according to a new report from the Insurance Research Council. The state, once notorious for its high insurance costs epitomized by Detroiters’ anthem is now seeing a promising trend. The number of uninsured drivers in Michigan has declined by approximately 6% from 2020 to 2022, signaling a shift away from the long-standing issue of expensive car insurance.
Director Anita Fox of the Michigan Department of Insurance and Financial Services (DIFS) is at the forefront of celebrating this change. The Insurance Research Council’s study attributes Michigan’s significant decrease in uninsured motorists—the largest in the nation—to the state’s 2019 auto insurance reform law. Director Fox highlights the impact of the reform: “Under the old auto insurance law, too many Michiganders had to face the financial and legal risks of driving without insurance. The new law has made it possible for more Michiganders to protect themselves and their families with auto insurance.”
This decline in uninsured drivers is a major achievement, yet challenges remain. Michigan still ranks fifth in the nation for the percentage of uninsured drivers, including the District of Columbia, with nearly 20% of drivers lacking insurance in 2022.
The 2019 reform law introduced several pivotal changes:
- New Low-Cost Options and Rate Reductions: Previously, Michigan’s law required drivers to purchase unlimited Personal Injury Protection (PIP) medical coverage, often unaffordable for many. The reform allows drivers to choose from six different PIP medical coverage options, ranging from unlimited coverage to opting out entirely. Mandatory statewide average PIP medical rate reductions were also introduced, with insurers meeting or exceeding these reductions at every PIP coverage level.
- Amnesty Period for Uninsured Drivers: To further encourage insurance uptake, an amnesty period was implemented. During this period, uninsured drivers could purchase auto insurance without facing penalties or increased premiums due to their previously uninsured status. Over 202,000 previously uninsured Michiganders, including more than 83,200 who had been without coverage for over three years, took advantage of this opportunity.
- Elimination of Non-Driving Factors in Rating: The law also prohibits the use of non-driving factors such as sex, marital status, home ownership, credit score, educational level, occupation, and zip codes in determining auto insurance rates. This has been a crucial step in making insurance more accessible and fair.
These reforms have collectively contributed to a more inclusive and affordable auto insurance landscape in Michigan. The increased availability of insurance options and the reduction of rates have empowered more residents to drive legally and safely, significantly altering Michigan’s auto insurance narrative.
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